Retirement & The Sandwich Generation: Tips to Navigate Your Parents’ Evolving Needs and Finding Balance in the Chaos

A multitude of economic, social and cultural factors have given rise to many middle-aged Americans providing financial, emotional and physical support for their young children, adult children and parents at the same time, often with multiple generations living under one roof. Caring for children while caring for parents, while also trying to keep your own head above water, is a life masterclass in juggling. Needs are constantly competing for attention and resources, often leaving you stuck in the middle.
One of the main concerns facing the Sandwich Generation is: “How do I plan for my own future – my own retirement needs – when I’m constantly balancing the immediate needs of my family?” By addressing the three questions below, you can start to find balance in the chaos, while making sure your own financial future is secure.
What Are My Needs?
Flight attendants tell you to put on your own oxygen mask first before helping others and this is no different. The first step is to create a personal budget.
Determine Your Income. Specifically, you’ll want to determine your average monthly income. If your income varies by month, estimate by averaging the past six to 12 months.
Evaluate Your Emergency Fund. Keeping a stash of cash on hand in case of an emergency is essential. Your emergency fund should be separate from your day-to-day cash, and if you can, put away enough to cover at least three to six months’ of expenses.
Plan for Savings & Surplus. If you have surplus in your budget, it may be challenging to decide what to do with it. As a dual caregiver, there are an unending number of things you could do with that money, but the most important thing is to pay yourself first. A good rule of thumb is to save for your retirement ahead of your children’s college funds and your parents’ care needs. Be sure to pay off all your debt and evaluate your insurance needs.
What Are My Children’s Needs?
One of the biggest expenses of raising a child is education. If they’re young, consider whether private school tuition is going to be necessary. There may also be the added expenses of books, extracurricular activities and tutors. If you can swing it without sacrificing your own retirement needs, open a 529 College Savings plan, and start investing with as little as $25 per month.
Fifty percent of young Millennials plan to move back home with their parents after college. In order to make this work for everyone, it’s important to set expectations. Talk through everything from rent and shared expenses to division of household chores. Don’t neglect the impact this situation will have on your own retirement goals.
What Are My Parents’ Needs?
Navigating the needs of your parents can be emotional and tricky. But staying in the loop on what your parents have saved, where it is, what plans they have for the future, and who they trust as their Financial Advisor, will help protect their money and yours. You’ll also be better able to make decisions on their behalf in case of an emergency.
Budgeting for your parents’ current and future needs is important. The good news is that you can use the same process you used to create your own budget. Include discussions about their desired standard of living – and what changes would need to happen, given financial constraints. Don’t forget the hard questions: How long can my parents stay in their home? Can they afford home health care? Should they live with me? What about assisted living? Additional care? These are all discussions that need to happen before a move is required.
Finding Balance in the Chaos
Dual caregiving comes with a lot of chaos. Don’t forget to make yourself a priority. By creating a clear picture of the needs of every generation under your care, you can map out strategies and solutions that help your entire family thrive. And if you need additional guidance on how to balance this big picture, don’t be afraid to reach out to a financial advisor for help.
Brian Jacobs is an Executive Director in Valencia, CA at Morgan Stanley Smith Barney LLC (“Morgan Stanley”). He can be reached by email at brian.jacobs@morganstanley.com or by telephone at (661)290-2022.
Brian Jacobs may only transact business, follow-up with individualized responses, or render personalized investment advice for compensation, in states where he is registered or excluded or exempted from registration
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